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Finance Glossary

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Buy Stop Order


An order to buy a stock or security at a specific price above the current market price. This sort of order can help you avoid losses if a stock goes up a lot after a short sale. 


You shorted MSFT at $24. If it goes up a lot, you don't want to be crushed. So you put a buy stop at $27 so that the most you can lose (forgetting the cost of the borrow and commissions) is $3 a share.